Is the Debt Ceiling Unconstitutional?

By Elspeth Reeve

In his White House press conference, today's Media Dieter Chuck Todd of NBC asked President Obama to weigh in on the constitutionality of two familiar legal controversies: presidential war powers and gay marriage. His third was a somewhat novel topic: does the Constitution allow the U.S. to not pay its debts? (Obama didn't offer an opinion: "I'm not a Supreme Court justice so I'm not going to put my constitutional law professor hat on.") The idea has been floating around for a while, but Senate Democrats are now seriously considering giving up on these torturous debt ceiling talks and just declaring the debt limit unconstitutional. Sen. Chris Coons told The Huffington Post, "I don't think, as of a couple weeks ago, when this was first raised, it was seen as a pressing option. But I'll tell you that it's going to get a pretty strong second look as a way of saying, 'Is there some way to save us from ourselves?'"

The argument is based on the wording of the 14th Amendment: "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." Simply saying the debt ceiling is unconstitutional would allow the government to pay its bills while "leaving Tea Party-backed Republicans in the difficult position of arguing against the plain wording of the Constitution," Ryan Grim and Samuel Haass write.

Could the White House really take such a sweeping measure? First, a quick primer from USA Today's Richard Wolf on what's at stake if Congress blows the August 2 deadline, which would mean the Treasury Department would have enough money to cover only 44 percent of its obligations:

If Social Security, Medicare, Medicaid, unemployment benefits, payments to defense contractors and interest payments on Treasury bonds were exempt, that would be all the government could afford for the month. No money for troops or veterans. No tax refunds. No food stamps or welfare. No federal salaries or benefits.

Want to protect the social safety net? That would be possible--but only if Treasury stopped paying defense contractors, jeopardizing national security. Plus virtually every federal agency and employee.

To avoid that, could President Obama simply ignore federal law requiring borrowing above the debt limit to be approved by Congress?

YesGarrett Epps, a constitutional lawyer, writes for The Atlantic. Epps says the wording of the 14th Amendment is "extraordinary."

First, it does not simply say that the national debt must be paid; it says that its "validity ... shall not be questioned." Only one other section of the Constitution--the Thirteenth Amendment's proclamation that "[n]either slavery nor involuntary servitude ... shall exist within the United States, or any place subject to their jurisdiction"--is as unqualified and sweeping.

Second, it suggests a broad definition of the national debt: "...including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion."

From this language, it's not hard to argue that the Constitution places both payments on the debt and payments owed to groups like Social Security recipients--pensioners, that is--above the vagaries of Congressional politics. ... If Congress won't pay them, then the executive must.

In the event that congressional irresponsibility makes default impossible to avoid, [Obama] should order the secretary of the Treasury to simply disregard the debt limit and sell whatever securities are necessary to raise cash to pay the nation’s debts. They are protected by the full faith and credit of the United States and preventing default is no less justified than using American military power to protect against an armed invasion without a congressional declaration of war.
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Some will raise a concern that potential buyers of Treasury securities may be scared off by a fear that bonds sold over the debt limit may not be backed by the full faith and credit of the United States. However, given that the vast bulk of Treasury securities are 3-month bills that will turn over many, many times before this issue ever reaches the Supreme Court, it is doubtful than anyone will be concerned about that. And the Federal Reserve could assure investors that it will always be a buyer for such securities.

And Congress Couldn't Do Anything About ItThe New Republic's Matthew Zeitlin writes, because no lawmaker would be able to show how he or she was individually injured by the administration's ignoring of the debt limit, and therefore wouldn't have standing to sue.

But Here's Why Obama Shouldn't Do It argues The Washington Post's Ezra Klein.

[T]he danger isn't that investors never get paid, but that the way they get paid makes them lose faith in the country's management, which in turn forces the entire financial system to reevaluate the safety of a bedrock asset...

Layering a constitutional crisis over political gridlock may work in the sense that the Obama administration will win the court case. But it'll fail terribly in terms of sustaining the market's confidence in our political system. That's a step toward total breakdown, not evidence that agreement can eventually be reached and economic renewal achieved. The debt ceiling needs to be resolved in a way that assures investors that America's other economic problems will be resolved, too.

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